At its meeting today, the Competition Council reached the following conclusion by decision No. 9/2005 that Sjóvá-Almennar tryggingar hf. (SA) breached Article 10 of the Competition Act by engaging in price-fixing with Tryggingamiðstöðin hf. (TM) and Vátryggingafélag Íslands (VÍS). The background to the case is that in July 2002, a company engaged in car body repair and spraying approached the Competition Authority to complain about measures the insurance companies had taken in connection with the introduction of a new system for assessing vehicle damage, the so-called Cabas system. The company claimed that the insurance companies unilaterally set the unit price they were prepared to pay car repair workshops for repairs. The price was the same across all the companies and suggested that they had colluded.
The Competition Council's decision rules on the role of SA in this case. Previously, the Competition Council had reached a settlement with VÍS and TM, which is detailed below.
The Competition Council's decision states that the three insurance companies, along with others, had been working since 1999 to adopt the aforementioned Cabas system. This system is intended to standardise the work involved in damage assessment and is based on pre-determined units, replacing the subjective assessment that was previously common practice. Specifically, it is a calculation system used to estimate the number of estimated labour hours for the repair of damaged vehicles. The cost of the damage is determined by assessing the damage in the Cabas system against specific units, such that, for example, replacing a panel on a vehicle of a particular make counts for a specific number of units. Information on the number of units a specific vehicle damage is calculated to be is largely standardised in accordance with the results of measurements carried out by the system's Swedish vendors. Generally, the price per Cabas unit is intended to be a matter for negotiation between the garage and the insurance company.
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